Limited Payout Machine Association of South Africa: briefing on Industry Objectives

ECONOMIC AND FOREIGN AFFAIRS SELECT COMMITTEE
14 February 2007
LIMITED PAYOUT MACHINE ASSOCIATION OF SOUTH AFRICA: BRIEFING ON INDUSTRY OBJECTIVES

Chairperson: Ms N Ntwanambi (ANC, Western Cape)

Documents Handed Out:
Limited Payout Machine Association of South Africa presentation

SUMMARY
The Limited Payout Machine Association of South Africa described its objectives and achievements, the rules and regulations applicable to the industry, and the role and functioning of Limited Payout Machines, which were subject to a number of restrictions. New gaming terminals had recently been set up in bingo halls in Gauteng, offering electronic bingo machines, which had no limits on stakes or winnings. It was uncertain whether the new bingo terminals constituted games of chance, or were electronic versions of bingo. They held the potential to replace traditional bingo halls with mini-casinos. They could effectively circumvent government's gambling policies, constituted a threat to the limited payout machines, were not subject to the same restrictions, and had the potential to cause harm to communities. No impact assessment studies had been done on these new machines. The Association requested the Committee to investigate whether the new machines complied with government’s gambling policy objectives, and to set in motion a process to clarify the operation of the machines. It request that no new bingo licences be issued pending such clarification.

Members raised questions on how the machines worked, the central monitoring system, whether the matter had been raised with the provincial authorities, further details as to sites and licence conditions, warning campaigns about the dangers of gambling and community awareness programmes. Further questions addressed the phased process of introduction, beneficiaries, and community benefits. It was stressed that the Limited Payout Machines had been subjected to various studies and in themselves did not pose a problem, but rather that the new bingo machines had the potential for threats to the established industry and the community. Members agreed that to undertake some further investigations and to have a follow up meeting in due course.

MINUTES
Limited Payout Machine Association of South Africa (LPMASA) Briefing
Mr Elias Mphande, Chairman, LPMASA informed the committee that LPMASA was an association that was formed to regulate the limited payout machine industry, that comprised representatives from manufacturers, bingo operators and observers from the national monitoring system. It represented and promoted the interests of the industry, which included route and site operators and owners of premises. It maintained cooperation and gave input to the National Gambling Board, Provincial Gambling authorities, national and provincial government, and provided services to members.

Ms Lazelle Parton, Consultant to LPMASA informed the Committee that the Association provided limited payout machines in accordance with the restrictions placed on the industry, which she tabled and described in detail. Only 50 000 limited payout machines were allowed nationally, with a restriction of five per site. These machines offered a maximum stake of R5 for each game and a maximum win of R500.

Ms Parton detailed the policy objectives of government in regard to preventing over demand on gambling and preventing adverse effects on the communities. The National Gambling Act provided for clearly delineated phases for limited payout machines, to minimize proliferation of these machines. Implementation was currently in the first phase of rollout of 50% of the machines allowed. Socio-economic impact studies were to be done in between each phase. The objectives of the first phase rollout included the promotion of responsible corporate behaviour, compliance with national laws and standards for machines, connecting machines to a central monitoring system, encouraging commercial viability, investment, employment opportunities, especially for small and micro enterprises, and formalising the sector to eliminate the illegal market.

Mr Paul Leonard, Deputy Chairperson, LPMASA discussed the emerging outcomes of the industry. Limited payout machines operated in five provinces. 2 755 machines were currently operating, contributing R130 million to the economy and providing 6 000 jobs.

The Association was currently concerned with new developments. Over 300 new gaming terminals had been set up in bingo halls in Gauteng. There were no limits on stakes or winnings. There was no certainty whether the new bingo gaming terminals were games of chance, or electronic versions of bingo. They held the potential to replace the traditional bingo seats with mini-casinos. This had the effect of circumventing the gambling policies, and threatening the socio economic concerns expressed in the policy, particularly since no assessments had been done to evaluate the effects of society. The approval standards and processes for bingo differed from those of Limited Payout Machines and this would adversely affect the intended synergy between the industry components of casinos, limited payouts and bingo.

The Association therefore tabled a number of suggestions as a solution. These included the drafting of national norms and technical standards to clarify the technical differences between gambling devices that were electronic, computer or technological aids for playing bingo, and electronic copies of casino-style gambling machines. This would avoid the establishment of mini casinos. Pending such clarification the Association suggested that provincial boards should not license any bingo electronic machines or devices and not approve any further bingo licences.

Discussion
The Chairperson enquired as to the exact definition of bingo, and the definition of a maximum R5 stake.

Ms Mabe asked what a minimum return of 75% to players meant and how it was paid.

Mr N Hendricks (UIF, Western Cape) asked if the central monitoring system applied in each province, and if there were people on site to monitor the games.

Mr Leonard replied that each machine was connected to a data storage system, which recorded information such as financial turnover to determine if the provinces were paid their dues correctly

Mr Hendricks requested whether the concerns of LPMASA had been taken to the provincial authorities.

Mr Leonard confirmed that the concerns had been addressed both to Parliament and the provincial MECs, but this Committee had responded first.

Ms M Temba (ANC, Mpumalanga) suggested that the Committee visit the bingo halls to assess the situation.

Mr Leonard responded that LPMASA was happy to host a parliamentary visit in order to explain matters further.

Ms S Mabe (ANC, Free State) enquired if the site owners where the limited payout machines were situated were companies or individuals.

Mr Leonard responded that they could be either. Site owners where the limited payout machines were to be placed must first meet Municipal Council requirements, and a part of the revenue would be directed to corporate social investment. Operators would not tend to put machines in poorer areas. The gambling board approved each site before a licence was granted, after public hearings that would allow communities to object if they did not want a gambling site.

The Chairperson enquired whether LPMASA warned gamblers of the dangers of gambling.

Ms M Temba (ANC,Mpumulanga) requested elaboration on the community awareness programmes that were being carried out to safeguard the community from adverse effects of gambling from the community, and what programmes were in place to empower the communities.

Mr Leonard replied that all machines had warning labels that gambling was addictive. There was a national programme for responsible gambling, funded by levies on the gambling industry. This was fully independent of the industry, and operated a call centre and clinic to help gambling addicts. LPMASA also operated a programme visiting schools to inform learners about the dangers of gambling.

A member enquired if LMPASA considered that the advantages of the limited payout machines outweighed the disadvantages.

Mr Mphande responded that the introduction of limited payout machines was well thought out. and most of the concerns raised by Members were addressed in the waiting period before the commencement of operations of thee machines. He informed the committee that the issue was not concerned with the limited payout machines operation, but rather the threats posed by the new bingo machines, which were not subject to similar restrictions. He and Mr Leonard stressed that it was not certain where these machines fitted into the existing governmental policy framework. He added that the limited payout machines had already been subjected to impact assessment studies, but the new bingo machines had not.

Mr Hendricks asked if there would be problems in introducing and monitoring 50 000 limited payout machines nationally.

Mr Mphande replied that the 50 000 machines were to be introduced in phases so that impact assessments could be done to determine whether the proposed number of machines was too high.

A member enquired if the core beneficiaries complied with government equity policy.

MsTemba enquired how the community would benefit.

Mr Leonard responded that a minimum percentage of the sites must be controlled by members from previously disadvantaged groups. In response to how different communities had benefited, Mr Leonard stated that this information would be available from the National Gambling Board.

Members agreed that they would investigate the matter further, and that they would call a follow up meeting in due course.

The meeting was adjourned.